One CPA’s Campaign to Make Accounting Fun with Yuri Kapilovich

Yuri Kapilovich started #thefunCPA movement to change the stale, grueling culture of public accounting. On Episode 21 of CPA Life, he talks to John Randolph about his journey through seven different firms, including time spent in the Big Four, until he finally settled on starting his own firm, with a focus on a better work-life balance. Yuri understands that with the availability of information on the internet, the accounting industry must adapt to retain top talent. He is making it happen through his own firm, and he advocates for other firms to follow a similar path, as today’s generation of accountants simply won’t tolerate the conditions that have dominated the industry for so many years.

Transcript:

Welcome to another episode of CPA Life podcast where we spend time talking to firm owners, leaders and industry insiders who have a passion and a purpose that’s really centered around building firms that are people centric, and fun to be a part of. You see what I did there?

I do, well played.

For way too long, you know, the accounting industry. And I think you’re you’ll kind of agree with this, that there’s been a stereotype of the person sitting in a corner wearing the green eyeshade and stacks of Ledger’s on the desk. And the reality is in 2023, nothing can be farther from the truth. Today, we’re gonna be spending time talking to someone who is seriously passionate about changing that picture and that mindset. Yuri, glad to have you here today. I know that this is something that you’re passionate about. You started a firm in New York / New Jersey, and then you kind of ended up down this path, creating a “Fun CPA” movement. So, glad you could be here with us today.

Happy to be here. And I’m glad we’re able to make it work, because this has been a long time coming for you and I.

Yeah, we’ve been trying to put this together for several months and my schedule gets in the way your schedule gets in the way tax season gets in the way, kids get in the way, all of those things that tend to throw curveballs at you, but but we’re here, we’re able to talk we’re hopefully going to solve a lot of the problems that exist or at least talk about a lot of the problems and some potential solutions.

Solve them all, John. Right now. Me and you.

Exactly. Now whether or not anybody buys into the solutions, that’s a whole other story, that’s on them.

True. That’s right. But me and you will solve it. Handily.

Exactly! Yeah, it took us a century to get here, but we’re gonna solve it in just a few minutes.

No problem at all, yeah.

So let’s talk about how you got to where you are with your firm today, as well as #thefunCPA movement. You’ve got a similar story to a lot of other leaders that have gone out on their own last few years, where you started stereotypically, walking down that big four public accounting path.

Yeah, so you know, basically fresh out of school, everybody tells you, you go Big Four. And that is the way to go. And for me, you know, I mean, I tried to go into it, my grades were pretty good. But it was just shy, I won’t dive into the story too much, unless you want me to, about, you know, how my grades got all weird and everything, and then finally got settled out. When I graduated, it was like, just shy of what 3.4. And I think some of the larger firms were seeking a 3.4 minimum GPA to get in there, you know, to get into the big firms. So long story short, you know, around that, I started off at a couple firms interning, trying to get my name out there, then I finally got to the Big Four, got to actually have a chance to work at EY Miami, shout out to Miami, great, great place to be. And then I moved back to New Jersey.

And then when I moved back to New Jersey is when I started hopping around, almost to the point every 1.5 years, one and a half years, I would have a six month period where I’m like super happy, the honeymoon phase, everything’s exciting, a six month period, where I’m like, what is happening here, and then a six month period where I was just miserable, and just wanting to basically quit.

And so you know, and that was on repeat for about four, I think four or five firms. In total, I was at seven firms. And the goal was never to jump around, or whatever, it was the goal was always let me find a firm where I can be a partner where I can be happy and grow. That just didn’t exist for me. So much like you said, you know, following the same path, I finally realized that at firm number seven, and decided, let me take that shot, and let me go for it. And then you know, #thefunCPA movement didn’t start for about a year after I went out on my own and started posting, you know, on LinkedIn and everything like that, and it just grew to one day, I just kind of wrote #thefunCPA and I’m like, that’s cool. I’m gonna just keep using that. And then eventually, it just became more and more and leaning more and more into it.

You know, I think that there’s, your story is not unlike a lot of other people in the marketplace. The only difference is that somewhere along the way—instead of continuing to say, hey, there’s got to be a better way, let me go figure out what that is, let me go to another firm, see if they have it, if they have it, if they have it—the reality is that there’s so many firms where leadership is stuck in the same rut. All you’re doing is going from frying pan to fire just down the street. And I’m sure that some that you recognized and realized.

Yeah, it sure was, it was almost like on repeat, you know, it was just, the people were different. But the personalities and the things that I was doing and the things that I was not enjoying, were the same.

The firms that you work for were they all larger national firms for the most part, or bigger regional firms?

Yeah, I would say that the smallest firm that I’ve worked at was probably about 100 people, regional firm, and then the other firms were all larger. So the CohnReznick, EY, you know, with some of the bigger names in the industry, you know, thousands of employees in some of them.

When you looked at those firms coming out of college, what drove you down that path? Was it just the stereotypical thought process of mindset of, hey, to achieve the things I want to achieve in my career, this is the path I need to take, or was it something else?

So it’s funny, you know, especially when you’re going through your career, when you go through college, you don’t know anything, you don’t know which firm you want to be, you don’t know what the experience is going to be like, you’re just kind of going with the motions. So obviously, the only thing you know at the time is really, everybody’s telling you, Hey, you want to be at a big four firm, ideally, because that’s great for your resume. And that’s honestly all I knew. But before that a couple of internships with some smaller firms. And then I made my way to the Big Four, with EY. But yeah, I mean, very hard to know what you want to do straight out of college, that’s for sure.

I think it’s putting a lot of pressure on young kids, especially when you look at the fact that in the world that we live in today, and for as long as I’ve been doing this, for three decades, the turnover rate within those environments—in the first two to five years—the turnover rate in that space is ridiculous. And why it’s continually pushed, I mean, I get the understanding the mindset of the skill set that you could achieve. But outside of that it is not a quality of life move for anybody by any stretch of the imagination.

No, no, it is not. And interestingly enough, I would say that, for me, at least, you know, when I was going through these firms, again, you already know what to expect. And a lot of times, I think nowadays, people coming out of school are already, like, hesitant about it. Like when I graduated in 2010, to me, there was no, there was no other kind of, you know, the expectation was there, and it was no other option. I will, you know, I will be there, I will do the hours I’ll do what I got to do to get the experience is just what’s expected. But at the same time nowadays, as I give a lot of people feedback, as I try to coach people and help them out in their career, I always say like, it doesn’t matter where you start, honestly, it really doesn’t. Any experience is a good experience, you got to start somewhere.

You know, it’s interesting, you say that, because I’ll sit here and say that, probably 10 to 15 years ago, when I did more work from a recruiting standpoint, on the corporate side of things, there was a very strong mindset and a very strong mentality of you know, if I’m hiring a senior accountant, a financial analyst, an accounting manager, I want somebody with a Big Four background. I want somebody that has got some formal training, I want somebody that has been trained how to look at things a certain way. And there was also this perception that if I hire somebody out of the Big Four, Big Six, Big Eight, there’s a type of person I’m getting.

Fast forward to about 2015, somewhere in that range, there started to be some dynamic shifts. And at that point, we were still doing some work on the corporate side of things, and the mindset started to shift, and it’s even this way in public accounting, where, you know, “Hey, John, people in the Big Four typically don’t do well in our organization. Because what we found is when we hire that guy that’s got three years experience at EY, he’s working big, large, you know, ASC 740 tax provision stuff, and we’re a middle market firm. We’re dealing with a lot of pass through entities, and that guy has no earthly idea what we’re talking about.”

That’s a really good point. And I say the same thing to the people that I would speak to as well and help out in the sense that Big Four is not always equivalent to a highly exceptional person in one particular area. You got to think about, you know, at EY, for example, they had this, and they still do that DSG model, which is “Diversified Staff Group.” So what you do is, you know, in the beginning of your career, in the first two years, you’re trying to fill four buckets, whether that’s PCS, Private Client Services, which is what I did, high net worth individuals, so on and so forth. GCR, Global Compliance and Reporting, and International, State and Local, whatever other components.

So if you, for example, really gravitated towards the GCR, which is a Global Compliance Reporting, you were doing provisions you were doing massive, massive consolidated C corporations with just thousands of entities and then the most one of them someone was complicated stuff that I actually completely hate. But you know, to me, it was not an ideal experience, but you can get somebody doing that for 5, 6, 7, 8 years, they’ll become a senior manager, they’re gonna be a really hot commodity, but they cannot function in a small family office.

Yep.

They’re not gonna know what to do, they’re gonna be the equivalent of an intern. I call that pigeonholed, in the sense that you might be a complete expert in this one particular realm of tax, but you’d be completely useless to someone who might be looking at you with 10, 15 years experience in the Big Four, but you’re not going to add much value to them.

No, you’re really not. And I mean, the same can be said on the audit side of the business. I mean, I interviewed a candidate several months back, who was going into his third year, I want to say it was with Deloitte, as an auditor, and you look at the resume, and he’s been there almost three years, he’s got good tenure, he’s had two promotions, looks really solid, passed the CPA exam on a couple of sittings, we start talking, he’s got four clients, for clients in almost three years. They’re all large Fortune 100, Fortune 200 clients. And if you need somebody to audit cash, and fixed assets, he’s your guy. He’s absolutely your guy.

Yeah.

But outside of that, he’s lost. He’s absolutely lost. And so I know that you’ve done a lot of speaking, or had the opportunity to speak to graduating classes, some college classes, over the last few months. What’s kind of the biggest thing you hear from kids coming into the profession that they’re excited about, and what they’re concerned about?

Sure. So yeah, I think, you know, people that are coming into the profession. Now, it’s interesting, you say that, I mean, I think the most people are concerned about, like, in my viewpoint, the experience they’re gonna get, they’re concerned about their ability to transfer that out, after, already thinking about after public accounting, and what’s life gonna be, like, you know, what are the what are their options with regards to firms? They’re also concerned about what exactly they’re going to be doing at these firms. What is their experience gonna be like? Much like you said, when you’re dealing with these massive clients, Fortune 100 or 200, you even on the tax side of things, forget about audit, you know, I mean, the amount of work is so massive, and what you have to do is so large, you might be having like this little piece of the pie that you’re doing for the entire tax season, easily, and working like 60 to 70 hours a week, doing that one little thing for months on end. It’s nuts. So you’re not gonna see the full picture.

So I think a lot of people are focused on, and they want ownership, that’s what I’m getting a lot of, you know, how do I get ownership? How do I feel like I’m being a part of something? And they’re also seeking experiences, you know, specific to what they want to do in the future, people are thinking a lot further ahead than even I was in 2010.

You know, one of the things as we’re sitting here and talking that just kind of popped into my mind, you know, you talked about how you bounced around to different firms. Did you know in your career, hey, public accounting is for me, public accounting is where I want to be or anywhere in that thought process did you think about, I’m going to be like everybody else and get my 2, 3, 4 or 5 years experience and go work on the corporate side of things?

That’s a great question. For me, I did not. I never had an intent to go corporate. And the reason for that, from my perspective was that I always, almost since college, when I did like this VITA, which is a volunteer income tax assistance thing—where I did like some taxes, and I actually worked at Liberty Tax, which is a competitor of H&R Block—I’ve always wanted to do the smaller kind of, under 50 million in gross revenue. I never wanted to do anything with a C corp, those massive returns, it wasn’t for me. I didn’t find any appeal in that from day one.

So to answer your question, no, I didn’t never really thought I wanted to do the corporate world aspect. But what I did think I wanted to do, and I even applied, I didn’t get the job, but I was pretty much almost, you know, through the two or three rounds of interviewing, which was a private family office. You know, thankfully, well, I didn’t even not take the offer, I didn’t get the offer. So I continued in a public accounting track. But that was the only shift off of public accounting that I could that I could recall.

You know, I think only in the last few years has an option of firms like yours, or firms like other smaller firms in the marketplace. It’s only been in the last, really two, to four years, that that has become a viable opportunity in the marketplace for young kids, for professionals that are looking to grow their career, whether that’s coming right out of college, or getting 2, 3, 4 years experience at a larger firm and then taking a step to the firm. What do you think changed in that timeframe that has made a position with Kapilovich CPA in the future, or Dark Horse CPA, or many of the other firms that you and I both know, in the marketplace, what do you think is changed that has made those firms a viable, realistic opportunity versus 8, 10 years ago?

That’s a really good question. By the way, great pronunciation of my last name. That was impressive. I’m going to tell you that what has changed is, I think people again, people want a really a particular experience. They don’t want the necessarily long hours that everybody is expecting in the industry; they don’t want the big, firm, big name, it’s as much as they want and experience.

The experience that they want, I think, you know, goes well, with a lot of the smaller firms like mine, like Dark Horse with Chase, and the reason for that is because you’re gonna learn it’s fully remote, and the biggest thing is, they are able to pivot, and they’re able to make adjustments, you know, towards technology, or staffing, you know, or whatever it is like this, you know, in the snap of a finger, rather than these giant, you know, cruise ships of firms that, you know, pivot in a worldly slow manner, if at all. So, I think that that’s a huge difference now. Plus, the Internet has helped, right? You know, you have LinkedIn, you have Fishbowl, you have Reddit, you have all these things out there that allow you to see into the world a lot more than I was able to see in 2010. And here’s some of the stories that are actually horrifying.

Yeah, it’s really interesting to me, Yuri, because I don’t think that anybody would ever post something about you know, on Facebook, let’s just say, or Instagram or TikTok, you know, “Hey, I just wanna let everybody know that I stepped back into an abusive, ugly relationship.” But that is in effect, what happens on LinkedIn, when I see people posting, “Hey, happy to announce I’m now a senior, senior manager, manager, at plug in the name of the firm.”

Because that’s in effect what is waiting for you, and you can’t plead ignorance. You can’t plead ignorance, “Hey, I didn’t know this was waiting for me on the other side. I had heard about it. But I really didn’t know if it was there.” No, like you said, you’ve got Reddit, you’ve got Fishbowl, you’ve got Going Concern. You’ve got all of these platforms, where people can vocalize and do vocalize, you know, the horror stories of what’s waiting for you on the other side. So I just, I don’t understand, and maybe that’s something that I’ll consistently struggle with until I decide to not do this anymore, but that’s a challenge, I think.

Because I think part of it is, people don’t believe that I can build a career outside of that firm, at a firm like Kapilovich, or, you know, again, plug in a name of a firm that’s out there, doing things right. And I think part of it has to do with the fact that the noise in the marketplace is still because of dollars and people, the noise is still being made by Big 4, top 50, top 100 firms, because they’ve got deeper pockets to make that noise.

Yes. And I also think that it has to do with the opportunities out there. So I think what a lot of people are considering now, when it comes to their next steps, and whether they want to leave a bigger firm is they’re thinking about the step after that, right? So meaning if you had a good opportunity and a good career, say you know, and maybe it was a lot of hours, maybe it was difficult and everything else, but you’re at EY. So every year that you’re at these big firms, every year is your, every year that you’re at EY or a large firm equivalent, while you might be tortured, your value and your next price is going to be going up. And I think people are concerned that if they’re going to go to a smaller firm, like Dark Horse, like mine, or like whatever it is, they’re going to stifle their growth opportunity down the line.

I think there’s a lot of validity to that. And, again, I think nothing can be farther from the truth. You’ve recently, through the work that you’ve been in on on LinkedIn, you’ve grown your network, you’re interfacing now with a lot of people that are at, you know, what I call a choice point in their career. They’re at a fork in the road, maybe it’s two years, maybe it’s eight years, but they’re at a fork in the road where they’re making some decisions of, stay in public accounting, leave public accounting, stay in a Big Four national firm, what are my options? Because I still think there’s a mindset that my only option is frying pan to fire.

Right.

Regardless of whether it’s Big 4, top 50, top 100, or a local firm down the street or or firm. It is what it is the industry is stereotypical. And everybody is like everybody. But you’ve gotten to a point where you’ve been able to not only be a voice in the marketplace, through LinkedIn, but you’ve also started to become a voice, individually one on one with some people that you’ve created a situation where people can reach out to you and say, hey, can I pick your brain a little bit. When you talk to people now, hat are you hearing from those people that have experienced in the industry that they’re looking for, that they’re concerned about, that kind of thing?

So that’s a really good question. I think I’ve had up to like a plethora of people that with different experiences, different resumes in their background, whether they were at Big Four, they are at Big Four, whether they’re in regional mid size larger, or really small mom and pop shops—I think the real question, and this point is becoming more and more of where can I go next? Before, a lot of a lot of people have been trending towards their own firm. But a lot of people are also asking, where can I go where I will be treated well in a place that’s doing things different? I think people are realizing that the hours are killer, every firm out there in the top, I’m going to just go ahead and say the top 100 is basically the same, for the most part.

Yep. Absolutely.

Because at the end of the day, they’re all driven by the leadership. Whose leadership? Old school partners with old school mentalities from the 80s and 90s, that have been doing the same thing over and over again, that have grown up much to their defense, I would say, that have grown up in this culture in the 80s, and 90s, andI have posted about that too, where you were abused. And like I’m talking about when you know, what they would say, now you have an easy, you know, yelling, screaming things being thrown at you. And especially in the northeast, I cannot speak to the rest of the of the of the industry in the world. But that was the approach, you know? “You’re lucky to be in this industry,” in a suit and ties where every single day at, you know, in the 80s and 90s, in accounting, because it was a revered, highly desired profession, that was well sought after.

As the years went on, the allure of it went down. But those folks have not changed their tune. And if the allure is going down, and you’re still being in the 90s, and 80s, stuck in the old school mentality of yelling at people and torturing people, nobody’s going to come, you know? Like, people are gonna stop, because, you know, they’re not going to see the hope there of it changing.

You know, as you’re sitting there talking about that. I think there’s a couple of dynamics that caused that shift, you know, from the 80s and the 90s, where you’re talking about the culture that existed in that space. I would say at that time compensation was not as drastically different with a lot of other financial service roles versus where it is today. Entry level starting salaries, staff level salaries, I mean, they’ve moved the needle has moved. I’m not gonna say it hasn’t in two decades.

Yeah.

The needle has moved, but it has not moved to the percentage that banking, financial services investment banking, venture capital, and then also throw into that, you know, you got IT organizations, you’ve got more opportunity for people with a financial background to go do other things with that background.

There’s a guy that spent some time coaching the Cowboys down here that had spent a little bit of time in New York Bill Parcells. And I remember when Parcells came out of retirement to coach the Cowboys, and one of the things that the media kept talking to him about was how he was more old school. And he was that yeller, screamer coach.

Yeah.

And we’re in a world today where people don’t react to that, you know, how do you think they’re going to react to that? And I think he made a great point. And he said, you know, as long as we’re winning, I know what I’m talking about, and they’re going to listen to me. But the minute we stop winning, I’m just an old guy that’s angry, yelling at everybody.

Fascinating.

And I think that’s where we are with the public accounting profession, is, it’s just an old guy that’s angry yelling at a bunch of people, because it’s not winning anymore.

That’s a really good point. Yes, I absolutely agree with that. That’s a really good way to put it. That’s exactly what’s happening.

And I think that there are people out there, you know, within the industry, yourself included, that are doing everything you can to raise a voice above that noise. And you are right, it is the top 100. There’s a reason why we as a firm, do not touch any firm in the top 100. We just don’t. That’s one of the screening criteria we look at whenever we look at firms that reach out to us about working with them. If they’re a top 100 firm, we don’t work with them. I don’t feel like we’re doing people justice putting them in an environment that we know what’s going to happen to them.

But within that top 100 firm there is a repetitive mindset and process that has not changed. And the analogy used a minute ago, the cruise ship, as much as they want to change. And I’m going to say that there’s people in those organizations that want to change.

Yeah.

I think that we’d be remiss if we said there’s people that you know that all of them, you know, painting strokes with “never” and “always” kind of thing, you don’t do that. I think that we have to be cognizant of the fact there’s people in those firms that want to change, but you and I both know, it’s a whole lot easier to turn the ship around that carries 5, 8, 10, 15 people, than, you know, Celebrity Cruise Lines that’s running 4,000, 5,000 people on that ship. So it does become a very different thing.

Talking about ships, segue just a little bit. You love boats, you love water.

I do.

And with #thefunCPA movement, you have done a couple of things to kind of bring that together. Let’s talk a little bit about #thefunCPA movement, about what you’re doing there, and what your vision is for that.

Yeah. So I mean, for me, again, honestly, nothing that I’ve done so far, in my entire journey on LinkedIn, my entire journey of being self employed, has been intentional to get to a certain place. It just stacks and stacks of iterations, it’s things that I just tried to work, didn’t work, and I saw the reaction on the marketplace. And I mainly drive everything from LinkedIn, a lot of them, you know, because my main content is on there, my main following is on there, and I kind of, you know, see the reaction, and I kind of head in that direction more so.

Now, #thefunCPA is really a movement, to raise awareness to bring an alert to people to the old school partners to the really to that next generation is who I’m targeting, that next generation of partners who just made partners, congratulations, you just made a partner. That’s awesome. I see it on LinkedIn all the time. I know a lot of these people .I know a lot of these people want to change. Some of them are also very attached and very connected to those old school partners and want to maintain it that way to appease them. Those old school partners until they go, you know, retire, and they and they kind of go away, nothing is going to change, unfortunately.

But #thefunCPA moment is just bringing that awareness to people. In my opinion, that is very necessary. I hope that, you know, in a couple years as they get to the top, and there’s no more blockers, I’m right there to be help and support and consult them in some way, shape or form to help them continue that Fun CPA movement. And the other aspect of it is I want people to see that are in college that are in accounting, if they’re following me, and they see what I’m doing, I want them to have that hope that that’s going to come through bigger picture in the big industry, you know that the fun is coming. And it is. I think it has to.

I think you’re right, I think it absolutely has to. And I think that one of the things that is driving a change in the industry that you have kind of picked up on is who people were in this industry two, three decades ago, is not going to appeal to what’s coming into the industry, and what’s in the industry right now with two to five to eight years experience.

Yep.

I think that the sooner that people get their head and their hands around that. I think part of what drives that Yuri, is, I was talking to a candidate the other day and one of the questions I’ll ask candidates that I talked to on the tax side of the business is, you know, if they mentioned that they did a lot of work on the 1040 side.

Yeah.

One of the things I’ll ask candidates is, okay, on the 1040 side of things, from a percentage standpoint, how much of your 1040 work that you did was straightforward, W-2 income, maybe a Schedule C in there, versus more complex K-1 driven income, that people had business ownership in.

Nice.

And he was a guy that was probably about your age, and he started chuckling. He said, “John, I’ll be honest with you. I don’t know if there’s any such thing as a straightforward simple W-2, income driven 1040 anymore.” And I said, “What do you mean by that?” And he said, “Nobody works just one job anymore. So I don’t know if it’s the economy or the entrepreneurial spirit of people. But everybody’s got at least one side gig. Everybody.”

True. True.

They may have two or three, they may own five rental properties. They may have two Airbnbs. People are doing more things to drive revenue for their families and income for their families. But I think they’re also doing things to diversify their life. And if you think back to 20 years ago, the people sitting in public accounting, they were a W-2, income driven person. That’s all they did. One job, cradle to grave. It’s who they worked for. They didn’t have as my friend John Garrett would say, they didn’t have an “And.” You know, I’m an accountant, and I do this. They were just an accountant. Today, an accountant is just, I’m Yuri. I own a CPA firm. That’s what I do for a living. But let me tell you who I really am.

Yeah, and I can’t think of any better way to put that then when I was actually creating my website, right? You know, the least thing that I wanted, at cringed, I cringed at the stereotypical Cablevision associates with the Empire State Building in the background and some random people on the website, you know, saying accounting services, and here’s what we provide. Everybody knows what I provide. If I tell you, I’m a CPA that has my own firm, I don’t need to go much past that you already know what I’m doing. But what I you know what I wanted to create my website, it was more of a brand website, it was more of a personal brand, to see what I do. You know, I’m a CPA, and I have my own podcast, and I go on other podcasts, and I have a YouTube channel. So like you said, the end component is there. And there’s this day and age we’re living in now, to create something to launch a side gig. It’s so easy, you know, I mean, are you going to not blow up and become a millionaire? That’s not easy. But it’s easy to create something, it’s easy. If you have that Inkling in you. It’s easy to do that. Whereas like you said, in the past, and the more traditional mentality is you go to one place, you stay there forever, maybe you have a switch, you know, in your career, and you stay and you make partner and you retire.

Yeah. And I think that people are more focused. It’s not that they’re less focused on their careers. I think they’re just more focused on, how do I meld these things together?

Yeah.

How do I do what I do, so that I have fun here, and it drives the income for me to be able to do these other things, whatever these other things are? I mean, I can’t tell you how many times a week, the connection that I’ll make with a candidate starts with either, hey, I saw on your website that you play guitar, or, hey, I saw on your website that you serve on staff at your church, or hey, I saw this on your website, or I saw this on your LinkedIn profile. And oh, by the way, yes, I’m an accountant, and I’m looking for a job.

Right. Absolutely. I think that yeah, I think that a differentiator, I think that the aspect that’s now seen, you know, social media has opened it up to being more than just okay, you’re an accountant. What’s your differentiator? And one of the biggest differentiators for #thefunCPA is literally the name, #thefunCPA, because that does not like, compute in anybody’s brain. In fact, I went to a presentation, like one of those shows, you know, it was like a private aircraft, rich people toy shows, and I had my own booth, and I had my poster and it said, #thefunCPA. And I actually would ask every person that came by so what do you think that says, you know, like, just out of curiosity, take a look at the sign. And now I would say about 80% of them said “the Funk Pa.” They thought it was F-U-N-C, and then they were like, what is that? And I’m like, well, it’s actually #thefunCPA, and then the looks on their faces were of pure confusion. It’s actually hilarious. But that’s how you know you’ve struck something, you know, when people are confused.

There was a time, Yuri, where, and again, rewind the clock to, you know, 90s, early 2000s. There was a time that when I worked for a couple of large national recruiting firms, one of the business models we had was if and when possible, let’s hire somebody out of public accounting, that could potentially succeed on our side of the desk. And so anytime that I was looking for somebody that had an accounting background, what I would always tell people, if I was in the middle of an interview with you, and I was talking to you about looking for people, you know, one of the things I may say to you is, hey, we’re looking at a recruit to our team. And let me tell you what I’m looking for, I’m looking for the person that you’re going to happy hour with all the people that you work with, where you go to happy hour with a bunch of your friends, and somebody you’re talking about your career, what you do. And there’s someone in that group that says “I’m an accountant,” and everybody goes, “What? You’re an accountant? I would not believe that at all.” I think that that has become much more frequent than not. I think that there are people coming into accounting that 20 years ago, that was one of 25 people maybe in your star class at a firm.

Yeah.

Today, it’s probably 15, 16, 17, 18 of the 25 people in your star class.

Yeah, I mean, you know, plain and simple. People have personalities. I mean, they’ve always had personalities, but now they’re just not shy to bring them out. And I think that the biggest thing of people coming out of schools right now is that they know their value. Again, I think it’s all thanks to the internet, the expandability of seeing what they could do, of all the options, of all everything and the ease of googling or you know, everything is becoming easier and easier to find out what life is really like. They’re coming in, and they’re not gonna take anybody’s crap for, you know, pretty much right away.

Whereas you know, maybe me on the other hand, I’d, you know, I would take it for, you know, two years, three years, whatever, especially as a first as a person straight out of school, because I thought that that was the way to go. Not anymore. And I think that that is the biggest struggle that leaders and firm managers and partners and all that, that’s the thing that they’re not getting. People are not willing to do what they were willing to do 10 years ago.

I think there’s definitely a perception that’s changed with people coming in what they, what their boundaries are, what they’re willing to accept or not accept. And senior leadership is gonna have to get their head around the fact that people are not going to continue to put in those hours and stay for 2, 3, 4 years like they used to.

One of the other things that I wanted to touch on with you, in starting your firm, you had the ability to look at the pricing of the way that you structure your business. And I know that you’ve posted a lot about this, you and I have messaged about this on LinkedIn. You’re not really a fan of stereotypical time and billing in the CPA firm world, so talk to me about why that is your experience with it, and where you see the industry needing to go to make a huge shift in the culture.

Sure. And you can clip this right from here, because here’s the reality, and I’m going to say this, because it’s gonna be a good sound bite as well. And the truth is, I, in 12 years of public accounting, and big firms have not once had an accurate timesheet. And I want to dwell on that for a second. Because it’s true. Why do I say that? I mean, you know, it was not that I was trying to bump my hours, or I was trying to be fraudulent about it. But for the most part since day one, you have weekly requirements for most firms. Now, it’s a lot of them are daily. But weekly requirements to submit your timesheet. And I was not doing it daily. So I would keep tracking, I would keep a log, come Friday, I’d go trying to fill it back in.

Now, here’s the thing. When it’s tax season, and you’ve got a 55 minimum hour requirement, there’s something called the radar, right, which is your schedulers and your partners, and you want to be not, you know, flying below the radar, you don’t want to be above the radar getting caught and getting you know, emails saying your hours are short by an hour or two, and that happens.

Right.

So your motivation is to not have an accurate time sheet. And so to me, when I was in the industry, a lot of times, as it came up, like okay, wait a minute, I gotta submit my timesheet, I’m short hours. Where can I put this time? What can I do with this time, so that I can be, you know, flying below the radar, you know, not getting pinged. It’s still going to happen sometimes, you know, your other people around you and everything are, you know, having more hours than you. So you’re still on the radar, you might be above 55, but somebody else is at 80, you’re on the radar because you’re the lowest performing manager or whatever it is.

Here’s the reason why I say that this generates and creates an incentive to not have accurate timesheets, you don’t have accurate timesheets, the main focus of the timesheet is not to beat up your people, which is what it is actually used for. The main purpose of a timesheet should be to determine how much actual time was spent on a client so you can upcharge them and say, “Whoa, man, what we agreed upon this is way out of scope, my staff has spent three times the amount of time that I initially projected, you gave us wrong, you know, a bad idea at estimation of of the fees.” That is what a time sheet should be. So I’m not necessarily against inputting some time for the concept of me knowing that you know how long a certain return took, whatever it is. Because at the end of the day, when I talk, you know, when I talk to you as a client, and I onboard a client or I’m doing a prospect call, say what you got going on, I got this, I got this, I got this business, and I’m doing about 80 transactions a month, and I’m doing gross revenue of 5 million and that’s it. Okay, well, if those 80 transactions a month were really 800 when I’m looking at it, and I’m looking at my timesheet and or whatever it is, and I’m seeing, oh, my person actually spent, you know, 50 hours, you know, whatever, 50 hours a month on this, this is not what I expected, your fee is going up.

Yeah.

That’s how it should be done. Your priority is on your staff. How do you know how your staff are doing by seeing? Are they working more than they were actually anticipated at budget? And that is really the core core issue with the industry is that you’re not having accurate timesheets because people are trying to, you know, finagle the radar so to speak. Now you don’t have accurate timesheets, you don’t know how much time was actually spent on it on the job. And now you don’t know how to price it.

Yep. I’ve said two or three times in previous discussions with people on the podcast, we moved to a fee based value based pricing firm about two and a half years ago. It was right around the time COVID hit things I don’t remember his right for right after. And since then, what I’ve come to realize is one, when did I ever think it was okay? To get a phone call in April to say, “Hey, this is how much money you owe to the IRS, and oh, by the way, this is how much money you owe to us.” Why I ever thought that was okay, mentally from a user standpoint, I don’t know.

The second thing is, since I’ve made that switch, I have never once asked my accountant, “Hey, how long did your people work on my tax return?” I really don’t care. I don’t care.

True.

Send me a bill every month, I will pay you every month, you know, take care of my accounting, do my taxes. And I don’t care if you spent two hours on my work, or 22 hours on my work, I’m going to pay you. I’m going to pay you. And I don’t have a bill coming, you know, in April or October when I’m told what I owe to the IRS. And I don’t have a bill coming from you. If I do have a bill coming from the IRS. It’s because you and I have talked about it. We strategized on it. And we made the decision. This is the path we’re gonna go down. So it’s not, it’s never a surprise.

And I think that the challenge is in the industry is getting people to disconnect those two things from work product and value is hypercritical so that it’s not a management tool, I think. I don’t know if I talk to you about or not. But there’s a there’s a kid I talked to going into Labor Day last year around this time of year. Yeah. Hewas telling me that they were already at a 65 hour requirement. Yep. For the full tax season. And we were talking about and I said you know to get 60 and 65 billable. So to get to 65 billable you’re having to work 70, 75, maybe 80 hours? You said exactly. And I said are you working that much? And his exact words, “Well, my timesheet says I am.”

Exactly. I shook my head no, because there’s no way. You’re not. It’s not humanly possible. Your timesheet says you are because again, you’re lying on a timesheet. But here’s the interesting thing about but you are, but we’ll use that to just kind of piggyback on that. You said that you’d be surprised by a bill that came to you, which means that your I guess your accountant or whatever was doing actual—actually billing you by the hour, which is fascinating, because I really, especially at the big firm level, actual hourly billing does not happen, unless there is an out of scope component to the engagement.

Let’s face it, people like Brandon Hall, a few other folks talk about this all the time: in big firms, and pretty much any firm that is larger than like 20 people, most of the time you speak to a prospect, you figure out, you get a rough idea. You tell them what your price is your you know, fixed fee, you send an engagement letter for that fixed fee, you and they obviously have a component in it at time, you know, there’s time and material or whatever hourly rate for anything out of scope. But a tax return and probably some bookkeeping is not out of scope. You know, you’re not going to collect anything extra from that.

But let’s talk about a tax return in general, you’re going to quote somebody $10,000 for a tax return. And much like you said, they’re not going to care how many hours you’ve spent if they agreed to the $10,000, that’s on you. Right? So the marginal utility of the staff who maybe would work 40 hours a week, you give them a five hour project, it’s not costing you any more. It’s just you know, so really, it’s like, a silly, really overall silly concept. But what I do want to say is, you know, it is a very difficult concept to just drop all of a sudden in a big firm setting.

Yeah, it goes back to the cruise ship, you can’t turn that on a dime. And I get that I understand that. But what you do end up with at times, I talked to a gentleman this week, who is a senior manager with a top 20 firm. He’s been there 22 years.

Wow.

22 years. And he was with a large local firm, midsize local firm that was purchased by a top 20 firm, about five years ago. And every year for the last three years they have moved the goalposts on partner.

Yeah.

And he and I have talked off and on for a couple of years, called me and said, “Hey, I think it’s time to make a move.” 20 plus years with one firm.

Crazy.

Awesome background. And I asked him, “What is it that has driven you finally to this point, to say it’s time to move on?” And we started talking about some things, you know, that were small issues. “And but here’s the biggest thing, John: I got my raise earlier this year, and my raise was just under 5%.”

Ouch.

“But they raised my billing rate 190%.”

Because billing rates are made up. And that is a fact. You know, these big firms, especially ones the size of the one you’re referring to, you know, my rate was $500 an hour. But the thing is, I wasn’t seeing $500 an hour, and the client was never billed ever, again, outside of an out of scope engagement, which by the way out of scope engagements typically have a maximum so that the client has never like surprised that you know this out of scope work took $200,000, we’re not ready for it. So you have a maximum amount set on that out of scope. So even if my rate is $200,000 an hour, right? If you agree with the client, that the maximum they’re gonna spend is $10,000, what is my rate? You know? It’s insignificant, right? And again, then it isn’t significant in pricing, because you’re never going to collect that true rate.

So the only time it comes into play is when you’re doing budgeting. So you know, I’ll put together a budget, for example, on this client, I’ll try to figure out how many hours it’s mine, staff, senior whatever, partner, mix in their rates, put in a little cushion, that’s the rate. And you pitch that to the client, and they say, $25,000, that’s ridiculous. I’m not paying more than 15. And then you settle on 20. Who cares about this rate? You know what I mean? Like, it’s all just made up nonsense that you know, like, and that’s I’m saying, like, what I mean, by the extra hour, marginal utility, where if you put a senior on it, and they spent five more hours, they’re not costing you more—what really is your extra cost? Except for just pure profit on whatever that fee is.

Yep. I think where the challenge becomes with someone like this guy that I was talking about, is when you begin to tie hourly expectation, you’ve got to deliver X amount of hours, then you as an individual begin to connect the dots of the hours I’m working, the hours that you’re billing me out at, and my effective return on that, that I’m getting.

Yeah.

And, you know, there, I think there gets to be a point where somebody like this looks at it and says they they raise my bill rate x amount, I only got a raise of y, but my hourly expectation also went up, and you moved the goalposts on partnership, all of those things, how do you expect me to continue on this treadmill? And I think that is, as long as all of those things are connected, it’s going to be tough to hold on to people, and not create an environment of animosity, because like you said, those things never really are going to line up. They just aren’t.

Nope. Exactly. And it really, at the end of the day, the partnership realm, the ability for that person to make partner, unfortunately, is 99% politics in this situation you’ve described. You know, because somebody just like him with 18 years of experience, that has been putting in crazy hours that has been going everywhere with the partner happens to connect with the right partner, I’ve seen this time and time again, befriending a partner this and that. It’s game over: that person is getting promoted. And you’re not.

Yeah, it’s something that is outside of the scope of what it is that you have the ability to control. And you’ve got to make a determination whether or not you’re going to play that game.

So what is, looking into the future, what does the future look like for you over the next year, two years, three years, what you envision not only for your firm, Kapilovich CPA and Associates CPA, or #thefunCPA movement? And/or, I should say.

Yeah, you know, the answer about my firm is pretty simple. I mean, in the ideal world, if I could hire all the accountants in the world, I would, you know, and if I had that kind of opportunity to present them with, you know, a job, and being able to join this movement, if I had that kind of, you know, workflow and, you know, client base, I would love to. I want to hire as many people as possible, I want to give them the same experience that I give myself, which is, this is, we’re having fun. I don’t care where you are, I don’t care what you’re doing. Get the work done, and I don’t care if you work 30 hours a week, during tax season, because quite frankly, that’s what I work.

And to me, you know, I’m not building something that I’m building a mill here, where people are just going to be working 80 hours a week—you can work 80 hours a week of big firms. You know, with me, and what I want to create here is a firm where we don’t track hours, you just get the job done, do the best that you can, free up your time going out with your family and go on a boat or go on a boat with me, and you know, we’re gonna have a good time.

Then, for the industry, though. I mean, right now, I predict. I think that in the next two to three years, even the forks are already on the road. And I think that a smart firm will take the length and the path in which it starts having the same mentality: take care of your people, because they will leave. They will leave because if you continue this mentality that’s been going on for the last 20 plus years, all that’s going to be left is just partners. And you know It’s just gonna be basically a partner standing and going, who’s going to do this work looking around each other, and the partners are gonna end up preparing returns, because the staff will go to smaller firms where they can work 30, 40 hours a week, and they can get their side hustle on while doing accounting, like who, who, in their right mind would ever think that you’re gonna have a side hustle or doing accounting?

You’re right! You’re absolutely right. #thefunCPA events, you’ve had a couple of those, anything planned in the future?

Yeah, I’m looking to hopefully do one in September, I want to do like a fall and a summer. But you know, I gotta just plan it out right—I want to make sure that that, you know, I gotta get a good venue and get some sponsorship, because one of the things I struggle with, interestingly enough, is on the sponsorship side. Because convincing people, even, you know that there’s a bunch of CPAs together, even though most people like that, it’s a very specific crowd that would want to have access to that. If I got the, you know, good sponsorship, in that regard, I’d make it happen, because my first event was great and amazing, but I had to come out of pocket, just around $5,000 for it. So it was a little bit steep. And I got, it was a little bit unpleasant.

But going forward, I think I will, you know, I’ll be a little bit more strategic in that. And if not, I’m just gonna do a smaller event, maybe at my house or something like that. But the idea is there, you know, you got to keep that going, keep them moving, showcase that the industry can be different, and show that to firms that a pizza party isn’t cutting it anymore. No, this is not going to happen. You know, people are not excited about a happy hour on April 16. All they want to do is not be there on April 16. And I get that.

Absolutely. If someone is interested in learning more about #thefunCPA movement, or talking to you about career options, what’s the best way for folks to reach you?

The best way, if you are confused in the industry—you don’t know what your next steps should be—opening your firm, going to another firm, going to a big firm, go on my LinkedIn, click on that right on the front page, there’s gonna be a little link to the Calendly invite, we can chat for half an hour or do a discovery call, that’d be the best way for you to get a lot of value. I think you know, especially given my background was seven firms, I will help you and hopefully unconfuse you. That’s one and one as far as #thefunCPA again, LinkedIn is the best place to follow me see my journey, interact, hang out on LinkedIn. Then my website, TheFunCPA.co, that you can see just some of the other content I have out there, some of the other podcasts, I’ve done YouTube, so on and so forth.

Awesome. And for those of you that are listening, I want to thank you guys for investing your time here with us today. Yuri, I appreciate your time talking a little bit about a lot of different issues that are facing all of us today in the public accounting space. So thank you for your time, Yuri.

You got it. Thanks for having me on, John. Really appreciate it, glad we were able to make it happen.

Absolutely. I enjoyed it as well. And if you like what you’ve heard, give us a like, leave a comment below or better yet, subscribe to the podcast on a platform of your choice, so that you won’t miss any of the great content and many of the guests that we have coming up in the very near future that are going to be talking about what it’s like to live the CPA Life. Until next time.

We hope you enjoyed today’s episode. Be sure to subscribe on your favorite podcasting app, leave a five star rating and visit our website for links and show notes at CPALifePodcast.com. We’ll see you next time on CPA Life.